Beginning in the third quarter of 2008, S&P began evaluating ERM programs as a component of their overall reviews of management effectiveness for rated entities. They began their reviews by focusing on two of the four core elements of their ERM assessment framework—an evaluation of the risk management culture within the organization along with an investigation of the strategic use of risk management data. This brief provides details about the assessment and sample discussion questions issued from S&P.
Implementing effective enterprise-wide risk management processes can be daunting, given the volume and complexity of risks facing most enterprises are at all time highs. Combined with that is a continued increase in expectations that boards of directors and senior executives are effectively managing the portfolio of risks for the enterprise. To respond to these challenges, many boards of directors are directing executive management of organizations to embrace enterprise risk management (ERM) to develop a stronger top-down holistic view of enterprise-wide risks.
Convergence of U.S. GAAP with IFRS is underway. Considering the SEC’s support for a single set of global accounting standards, it is reasonable to believe that the SEC may allow, or even require, adoption of IFRS by U.S. registrants in the not too distant future. It is therefore important for audit committees to gain an understanding of IFRS. They should also be prepared to ask members of the company’s management team specific questions to determine management’s preparations for the possibility that the SEC could allow or require IFRS.
Success for not-for-profit organizations (NPOs), regardless of their type or size, is built on a firm foundation of fiscal accountability and governance. Achieving these oftentimes elusive goals requires more than traditional business know-how and insights into industry and sector trends. NPOs can more successfully fulfill their mission and member goals, through the knowledge and experience of audit committees.
Audit committees by nature are not glamorous, and seem to have earned necessary-evil status at most companies. However, an audit committee can be a very effective tool to ensure proper and consistent financial reporting. Whether your company has an audit committee or is thinking about forming one, now is a good time to consider its advantages and effective operation.
Benefits of Audit Committees and Audit Committee Charters for Government Entities (April)
The creation of an effective audit committee function can help a government establish this accountability because it can focus specifically on issues related to fiscal accountability. Furthermore, a government audit committee can devote more time to fiscal accountability matters, resulting in greater benefits.
A primary driver of ERM-related concerns is confusion about what ERM means and how it applies to corporate governance and internal controls. If you start with an understanding of corporate governance as a broad system of structuring, operating and controlling an organization so it can achieve long-term goals to the satisfaction of shareholders and key stakeholders, then it is easy to see how a process of managing enterprise-wide risks is central to effective corporate governance.